By Maria Ortiz
Mar 16, 2024, 01:40 AM EDT
The Biden administration said Friday it will take new steps to end the so-called “junk” fees in higher educationwhich can cost students billions but often have little justification.
Hidden costs or surprise fees that affect students may appear as “loan originator” feeswhich cost some seven million borrowers more than $1 billion a year, and in other mysterious credit card charges, with no option to avoid them, the White House said in a statement.
The White House said its initiative aims to four types of junk rates: student loan origination fees, junk college banking fees, automatic textbook charges, and colleges keeping excess money in a student’s meal plan.
“Each year, students, including federal student loan borrowers, incur billions in additional invisible fees or costs for unused meal account funds, use of a credit card or bank account sponsored by college, paying for textbooks, or simply getting a loan to pay for school,” the administration said in the statement.
“In addition, students are not always provided clear and direct opportunities to avoid fees for services they do not want. “Hidden costs and deceptive practices are not only frustrating: they cost millions of students and borrowers money,” the statement added.
The president’s 2025 budget proposal calls on Congress to end student loan origination fees, which can range from 1 to 4% for borrowers and add thousands of dollars to an individual’s debt.
The Department of Education is also targeting university banking fees in the negotiated regulatory process. Universities sometimes require that students use certain banks to access their financial aid, but some of these institutions have charged surprising and expensive hidden fees.
The department, in the negotiated rulemaking process, also seeks to end automatic billing for textbooks and would allow students to opt out and find a textbook at a more affordable price.
And it is formally considering regulations so that students get refunds on your meal plans if they don’t use the full amount instead of the school keeping the leftover money.
“The fees addressed in today’s announcement may be imposed multiple times during the undergraduate or graduate experience,” the White House said.
The administration added that these actions would build on the president’s previous work to prevent schools from withholding academic records and make the cost of college more transparent.
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